China's central bank is preparing regulations that would allow commercial lenders to swap non-performing loans of companies for stakes in those firms, two people with direct knowledge of the new policy told Reuters.
The new rules would reduce commercial banks' non-performing loan (NPL) ratios, and free up cash for fresh lending for investment in a new wave of infrastructure products and factory upgrades that the government hopes will rejuvenate the world's second-largest economy.
NPLs surged to a decade-high last year as China's economy grew at its slowest pace in a quarter of a century. Official data showed banks held more than 4 trillion yuan ($614 billion) in NPLs and "special mention" loans, or debts that could sour, at the year-end.
The sources, who spoke on condition of anonymity, said the release of a new document explaining the regulatory change was imminent. The People's Bank of China (PBOC) did not immediately respond to requests for comment.
"Such a rule change shows banks' bad loans have risen to such a level that this issue has to be tackled now before it's too late," said Wu Kan, Shanghai-based head of equity trading at investment firm Shanshan Finance.
State banks have extended loans to government financing vehicles and state-owned coal and steel producers, so this policy can help give lenders time to deal with non-performing assets as China pushes supply-side reforms, Wu added.
The quality of assets held by banks is worse than it looks, analysts have said. To avoid stumping up capital and to protect their balance sheets, some banks have under-reported bad loans and under-recognized overdue debt.
The top banking regulator has warned commercial lenders to pay special attention to risks.
12:50 AM MST | March 10, 2016 | Natasha AlperowiczThe Ineos Intrepid, the world’s largest LNG multi gas carrier, on Wednesday left the Markus Hook terminal near Philadelphia bound for Rafnes, Norway carrying 27,500 cubic meters of US shale gas ethane. The shale gas is cooled to -90ºC for the journey of 3,800 miles, which is expected to take 9-10 days. US shale gas will complement the declining gas feed from the North Sea. “This is an important day for Ineos and Europe. We know that shale gas economics revitalized US manufacturing and for the first time Europe can access this important energy and raw material source too,” says Jim Ratcliffe, chairman and founder of Ineos.This is the first time that US shale gas has ever been imported into Europe. The Ineos Intrepid is one of four specially designed Dragon class ships that will form part of a fleet of eight of the world’s largest ethane carriers. The Ineos Intrepid has “Shale Gas for Progress” emblazoned along its 180 metre length. “Shale gas economics has revitalised US manufacturing. When US shale gas arrives in Europe, it has the potential to do the same for European manufacturing,” Ratcliffe says. The project has included the long-term chartering of eight Dragon class ships and will create a virtual pipeline across the Atlantic; connection to the new 300 mile Mariner East pipeline from the Marcellus shale in Western Pennsylvania to the Markus Hook deep water terminal near Philadelphia, with new export facilities and storage tanks. To receive the gas, Ineos has built the largest two ethane gas storage tanks in Europe at Rafnes, Norway and Grangemouth, UK. Ineos will use the ethane from US shale gas in its two gas crackers at the two sites, both as a fuel and as a feedstock. It is expected that shipments to Grangemouth will start later this year. “We are nearing the end of a hugely ambitious project that has taken us five years. I am proud of everyone involved in it and I believe that Ineos is one of very few companies in the world who could have successfully pulled this off. I can’t wait for the Ineos Intrepid to finally get to Norway and complete the job,” Ratcliffe says.
LONDON (ICIS)--Management teams at some petrochemical companies are not fully facing up to the reality of the extent of shifts that have rippled through the market in recent years, the co-authors of a report by ICIS Analytics & Consulting and International eChem said on Monday.
Firms looking to maintain course in spite of the global downturn and demographic shifts in many key markets are avoiding facing up to the reality of the current state of the economy, according to International eChem’s Paul Hodges.
“The first reaction to a shock is usually denial,” he told ICIS.
“People adopt a position of ‘It’s not great, but I can carry on with what I’m doing, I just need to be a little smarter,’” he said. “That is the comfortable middle, and we can’t go on like that.”